FTSE 100 plunges after China PMI, resources off

LONDON (MarketWatch) � Miners and oil firms pressured the U.K. stock index Monday, after a preliminary reading for Chinese manufacturing showed activity continued to contract in April, while banks tracked declines in the sector across Europe on the back of political concerns.

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The FTSE 100 index UK:UKX �tumbled 1.9% to 5,667.57.

Resource firms weighed heaviest on the index after HSBC�s flash purchasing managers� index for China showed manufacturing activity contracted in April, though at a slower pace. The index rose to 49.1 in April from a final reading of 48.3 for March. A reading below 50 indicates contraction.

Shares of commodity firms tend to move on growth indications for China, as the country is a major user of natural resources.

Vedanta Resources PLC UK:VED �lost 5.7%, Rio Tinto PLC UK:RIO �declined 4.8% and Antofagasta PLC UK:ANTO �dropped 3.2%. Metals prices were also off.

Oil stocks tracked commodity oil lower, and BP PLC UK:BP �gave up 1.2%, BG Group PLC UK:BG �slipped 1.9%, and Royal Dutch Shell PLC UK:RDSA �UK:RDSB �RDS.A � RDS.B �was off 1%.

Banks were also lower, keying off losses in the European banking sector, where political concerns in France and the Netherlands spooked investors out of risky assets. In France, Socialist candidate Fran�ois Hollande won the first round of presidential voting Sunday, sending him in a runoff election with President Nicolas Sarkozy to be held May 6. Politics, PMI amplify euro-zone debt fears

Hollande�s round-one victory casts �uncertainty for the markets over what the prospect of a Socialist victory on May 6th could mean for ratifying the Intergovernmental Treaty on the fiscal compact and resolving the debt crisis,� said Mike Lenhoff, chief strategist at Brewin Dolphin, in a note.

Markets were further jittery after data showed business activity in the euro zone contracted at a faster-than-expected pace in April. The manufacturing purchasing managers� index dropped to the lowest level in 34 months to 46.0 in April from a reading of 47.7 in March. A reading below 50 indicates a contraction.

Lloyds Banking Group PLC UK:LLOY �LYG �gave up 2.4%, Royal Bank of Scotland Group PLC UK:RBS �RBS �dropped 3.7% and HSBC Holdings PLC UK:HSBA �HBC �shed 1.8%.

Outside the main index in London, Cable & Wireless Worldwide PLC �surged 12% to 36 pence a share after Vodafone Group PLC UK:VOD �agreed to buy the telecoms operator in a �1.04 billion ($1.27 billion) recommended cash deal. The deal values Cable & Wireless Worldwide at 38 pence a share. C&W Worldwide agrees to Vodafone proposal. Shares of Vodafone was off 0.1%.